Flashcards
Inflation
Cards in this deck (3)
- 1Cost push inflationIf firms face increased costs and inelastic demand for their output, these costs will be passed on to the end consumer.
- 2Demand pull inflationWhen company is operating beyond its full employment level of output prices are pulled up as a result of an inflationary gap emerging.
This excess demand can often stem from optimism that accompanies rising asset prices but usually from politically inspired tax cuts. - 3DeflationOpposite of inflation - when there is a fall in prices and inflation becomes negative.
If supply of goods rises faster than the supply of money then the purchase power of money increases and the general level of prices falls.
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- CIMA Financial Planning Flashcards on Inflation, created by Katerina Kritikos on 08/05/2022.
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- Katerina Kritikos
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